Each and every jump from one network technology to another presents wireless infrastructure vendors with a chance for new business. And sure enough, changes are afoot in the infrastructure space again today as mobile operators make their climb to fourth-generation networks. While recent newcomers are making significant wins outside the United States, it’s mostly the incumbents that are winning the biggest network contracts here in a country that has arguably become the early leader in 4G technology deployments. LTE has presented telecom gear makers with a window of opportunity to shake up the space and see market shares slide every which way between competitors new and old.

Instead, the latest major contracts for LTE in the United States are going to the incumbents in this space, particularly Alcatel-Lucent and Ericsson AG. “Ericsson is the 800-pound gorilla. It’s the traditional market leader,” said Keith Mallinson, an analyst at WiseHarbor. As we head into 2011, the outlook for infrastructure vendors in the United States will be defined in large part by LTE. “It’s a very important time with the coming of LTE,” Mallinson added.

Maintaining relationships that matter

Alcatel-Lucent and Ericsson have quickly re-affirmed their leadership position in the United States with deals already lined up to provide equipment to Verizon Wireless and AT&T Mobility for their respective LTE networks. "They’ve done really well, but it’s also an extension of the positions they were in,” said Peter Jarich, research director at Current Analysis Inc. “A lot of it is relationships… You know who works, you know what works well,” he added. In AT&T and Verizon’s case, management systems might already be in place that can be extended to LTE, thereby removing the need to implement entirely new platforms. As for the other vendors, Jarich said he’s surprised by the showing from Samsung Electronics America Inc., a company with little presence in the infrastructure market until only recently. He also noted the importance of Nokia Siemens Networks’ recent nod to supply equipment for Lightsquared’s LTE network. "What you have happening right now is you have a lot of the operators who are going back and forth,” Jarich said. Vendors make it a habit to play up every new trial and deployment, but there is no rules about what gets counted as a win. After all, vendors claim wins in different ways. "It also shows how much pressure these guys are putting on this,” Jarich said. While Jarich and other analysts are particularly swayed by customers, it’s also worth noting which vendors are working on trials with new carriers. "You have to give more credit to the operators,” he said. Ericsson and Alcatel-Lucent are the “naturals” in the United States, as Mallinson puts it, but there are plenty of competitors pulling out all the stops to get noticed and considered for new contracts.

Chinese vendors eye new points of disruption

Chinese vendors may have the greatest chance to cause disruption in the U.S. market, but they have been sidetracked recently by a series of reported security concerns. There is an overall theme emerging wherein "national security concerns” continue to be raised against the Chinese vendors in one forum or another. Almost any negative activity that perpetuates this trend, whether perceived or real, will continue to derail the Chinese vendors hopes of grabbing a bigger share of the global wireless infrastructure market. Bad news isn’t always better than no news at all. And that’s particularly true for heavily regulated (and leveraged) industries like wireless telecom. Huawei is particularly dogged by reported ties to the Chinese military and subsidies or financial incentives that it is rumored to be receiving from the Chinese government. The company has also been accused of stealing intellectual property from its competitors. “There seems to be reluctance to work with them here,” Mallinson said. "In terms of reluctance its difficult to know if it’s just Huawei or Chinese vendors in general… Huawei is significantly bigger than ZTE.” Huawei, which was founded by a former Chinese military officer, and ZTE, which was founded by a group of state-run companies that now own a minority share in the business, have consistently denied any collusion with the Chinese government or military.

Flagged for security concerns

“Perception is reality to some extent,” Jarich said. Even if a carrier is convinced that there are no security issues, there could be bigger problems with the government or other forces, he said. From a carrier’s perspective, “I’ve got no shortage of other suppliers I can work with.” he added. Huawei’s growth has been clipped in the United States because of these problems, but not completely halted. The company supplies equipment to Clearwire Corp., Cox Communications Inc. and Leap Wireless International Inc. The overall success of Huawei isn’t likely to be defined by its position in the United States, but it shows no signs of relenting in its quest for more big contract business here. Though even the fiercest competitive tactics may not be enough in the face of political pressure. "Certainly the Chinese have been willing to buy into markets” Mallinson said. "I think they will get in there at some point.” A price war is one thing, but technology advances are entirely another. “Initially they seem like copycats where the technology’s not so good, but it’s cheaper and before you know it they’re right on the leading edge,” he concluded.